S&P cuts United Distribution

S&P said it lowered its corporate credit rating on United Distribution Group Inc. to CCC- from CCC.

The outlook is negative.

At the same time, the agency lowered its issue-level rating on the company’s first-lien revolving credit facility and term loan due October 2018 to CCC from CCC+, and the issue-level rating on its second-lien term loan due April 2019 to C from CC.

The 2 recovery rating on the first-lien facilities indicates an expectation for substantial recovery (70%-90%; rounded estimate: 75%) in the event of a payment default. The 6 recovery rating on the second-lien term loan indicates an expectation for negligible recovery (0%-10%; rounded estimate: 0%).

“The downgrade reflects that UDG's $236 million senior secured term loan due October 2018, which accounts for about 55% of total adjusted debt, is an overarching credit consideration that poses the risk of the company defaulting on its debt obligations in less than six months,” S&P said in a news release.

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